Commentary on Radio & Audio

August 14, 2014

Disney's Devastating Signal About Radio

Way way back, I think it was about 1998, I made a prediction in Radio Ink, that talked about how one day all of radio would be digital and online and we would see a time when AM and FM stations were no longer the primary means of distributing our programming. I went so far as to say that some would sell off their properties because they were no longer needed. I got lots of hate mail on that one.

Yesterday, Disney, one of the world's most respected media companies, sent a signal to the media and advertising world that could be devastating for radio. Essentially, they said they are selling off their AM and FM signals because they no longer need them, since only 18 percent of listening is coming through AM and FM. The rest is coming from digital or satellite.

Let me restate that.... One of the world's giant media companies is saying we no longer need AM and FM stations because our listeners are digital.

Ouch.

This is the first time in history where there is actual action from a radio broadcasting company to remove AM and FM from their distribution. It's the first sell-off of AM/FM properties because their listeners are digital.

A GIANT MEDIA COMPANY SAYING RADIO DOES NOT MATTERIf you think this is some tiny story that does not matter because no one really considered Radio Disney a major player in radio, think again. This isn't about Radio Disney, really, it's about a GIANT media company that owned radio stations, sending a signal to the world that radio is no longer important to listeners.

Yeah, but....

We can find lots of "yeah but" statements to tell why this really isn't a big deal, but those will fly under the radar. Media will ignore that Radio Disney was not a giant part of the radio landscape, they will ignore that Disney has so many other distribution channels like their TV networks to drive digital listening, they will ignore that theirs is just one research study, or that there is other research, which indicates that digital is not impacting radio listening that much yet.

What they will pick up is that Disney research, which is probably believed to be the most credible, only indicated that 18 percent of listening was coming from AM and FM, and since most was on AM they may send a message that AM is even less valuable. That can't help, especially in light of BMW's recent announcement that AM is being removed from their new electric car.

IS THIS THE END OF RADIO I'm already getting the calls from the analysts, board members, advertisers and investors.... Is this the beginning of the end of radio? Should we sell off our stations while we can? This just proves that digital is crushing radio.

Something seemingly so small as Radio Disney is sure bringing a lot of attention to the concept that young listeners are not using AM and FM radio.

If nothing else, it's a huge arrow in the back of AM

THE VOICE OF DISNEY CREDIBILITY If this were some small company that no one ever heard of this would fly under the radar, but since it's a respected media company that has decided to shed radio as its distribution channel, it sends a giant signal about how they feel about radio.

Radio, of course, will state its case about its continued strength, its growth, its relationship with listeners, its domination of the car, and all the other expected arguments, and as always it will appear defensive because it's coming from us, even though there is truth and fact to support much of those arguments. The fact that it's radio people saying it is a lot less powerful than Bob Iger saying, "Disney is selling radio stations because our listeners are listening online." (Note: There has been no statement from Bob Iger that I'm aware of, but when Disney makes a major move like that, he would have to bless it.)

RADIO'S PR NIGHTMARE This event is just another continuing part of radio's ongoing PR problem. Yet nothing, it seems, is being done. No giant PR firm is making radio appear hip and relevant in this digital era, no campaigns are reinforcing radio's story. Instead, many advertisers and business owners are are being told and believing that radio is dying. Just yesterday the head of one of the world's largest advertising agencies told me, "Pandora is doing a better job getting face-to-face with the advertisers and telling their story than the entire radio industry. Whether any of it is true or not, they are presenting data radio does not have, showing exact listening times radio does not have, and able to identify exact listeners in exact zip codes and deliver custom ads to those listeners; plus have they have a huge team in front of the customers and are making huge progress."

On top of this is the giant automotive issue where the big car brands are putting Pandora and slacker in their dash, and where since our DASH conference last year, Google and Apple have entered the space to own the dash and dominate its audio.

RADIO NEEDS TO OWN THE PRESS NOT JUST THE AIRWAVESRadio needs a giant PR and ad budget now. It needs to be handled by a major New York advertising conglomerate and it cannot be about using radio to promote radio.We always default to that alternative, yet we need to own the press, not just the airwaves. It needs to hail radio's relevance and find powerful stories that are believable and third-party research not related to any radio company or radio research company that builds credibility for its case. And it needs a giant team that is out meeting and promoting radio in a relevant fashion. Rather than trimming the RAB budget, the industry needs to increase it. Radio has a very capable leader in Erica Farber who needs to be empowered to take on this PR nightmare by directing the world's leading Ad and PR professionals in a massive radio relevance campaign. I once heard that Pandora was spending $18 million on PR and yet the entire RAB operating budget of RAB is a fraction of this and there is probably zero devoted to PR.

PERCEPTION VERSUS REALITYAm I overreacting to the Radio Disney announcement? I hope so. I see it as a major PR nightmare for radio (and definitely AM Radio) and a reminder that there will be more things in the future supporting the digital world which reinforce radio's declining distribution, where true or not. Remember: It's perceptions that people believe, not reality, and it is perception which needs to be changed.

If you have a good product - people will consume it. If your product is just like everyone else's you split the
pie and you have a problem sustaining the cost. Radio owners need to think independently and out of the box
on a per-market basis. The old days of "ascertainment' and dedicated percentages of various kinds of programming produced the winners of the industry who took their franchise seriously. For those looking for
license to print money - it is dead. Too many presses out there now. To those who understand the opportunity
and embrace the creative energy that can happen - you will have a blast - and the success fill flow naturally.
But if you measure your success by whether your friends in other radio markets think you are 'cool' you're probably dead. If you measure your success by the involvement of your staff, community and advertisers
in producing results for your community / market - you have a huge chance to drive through the 'hole in the line' that all the others don't see. That's life too. Radio people who are so caught in their ego that they fail to
realize they are nothing without their audience and their advertisers will have a lonely death.

Seriously.. you think a national spin/promo campaign is going to re-energize Radio. Not a chance. It will be a total WASTE of money. AM Radio was left on the side of the road decades ago by corporate suits (certainly not broadcasters) obsessed with mega profits and saving their way to record profits by cutting LOCAL content. And lets face it, why are they programming music on the AM band anyway. This really isn't complicated. How much LOCAL content have you ever heard on Disney Radio? Uhh, that would be correct, Zero. If you're going to create a mini-van friendly MUSIC and family-safe generic national format, it doesn't take a genius to realize that AM radio is NOT the platform to do it on. Disney owns 23 AM's and 1 FM. Disney should have sold these stations long ago, period. This is hardly a sunset moment for radio. It's nothing more than a strategic move by a company who have never been, are NOT local content creators, and never will be.

Eric I agree with your sentiments about the dawning Radio PR nightmare; however, within the industry, the business model if you will of placing a pre-teen targeted format onto AM, and having owned and operated AM radio stations, did not seem plausible In the long run.I hope that a major media player, will see an opportunity to enter Radio with major dial locations and signal coverage in markets like New York and Philadelphia, great regional signals like the former WTAE, Pittsburgh and the former WPLO in Atlanta.The AM dial is overrun with foreign language, religious, and brokered time radio stations...whose business models don't include an AUDIENCE.